Mixed performance on EU stock markets as attention turns to the Middle East. Tech shares shine in Milan

(Il Sole 24 Ore Radiocor) - The European stock markets have started the new week on a positive note, after a lacklustre week. Traders’ attention remains focused on the Middle East, where talks between the United States and Iran to end hostilities have reached an impasse. Today marks the expiry of the 60-day truce between Washington and Tehran agreed as part of the Islamabad deal, whilst the standoff over the Strait of Hormuz continues. According to reports in the Wall Street Journal citing Iranian and Arab sources, Tehran has used the last two months to prepare for a wider conflict. For his part, the spokesperson for the Iranian Foreign Ministry, Esmaeil Baghaei, said that ‘there is no 60-day deadline in the text of the memorandum of understanding’ and that the MoU established ‘a timeframe’ to continue ‘talks on two fronts’, namely the easing of sanctions and the nuclear issue, “which could have been extended had no outcome been reached”.

Against this backdrop, the FTSE MIB in Milan is trading higher, whilst other European markets are showing mixed performance. Meanwhile, Wall Street is bracing for a mixed opening.

On the stock market, tech shares are once again surging on the Milan Stock Exchange, led by Stmicroelectronics and Prysmian are leading the main index, buoyed by the sector’s strong performance in Asia, where robust demand linked to artificial intelligence has continued to underpin the prospects of companies integrated into the global semiconductor supply chain. Buying interest was also seen in Italgas and Saipem, whilst banks remain in the spotlight after the chief executive of Banca Monte Paschi Siena , Luigi Lovaglio, reiterated on Saturday the need to preserve the bank’s integrity so as not to erode its value. At the other end of the market, Fincantieri is slipping down the market; Amplifon and Brunello Cucinelli are also weak.

On the energy front, whilst awaiting news from the Middle East, oil is rising, with Brent trading below $90 a barrel. Meanwhile, the spokesperson for the Iranian Foreign Ministry, Esmaeil Baghaei, has stated that the talks with Oman are continuing and that they are taking a long time due to the complexity of the issue, the involvement of various parties and attempts by some countries to hinder the process. The scaling back of expectations of a rate rise by the Fed is weakening the dollar. The euro/dollar exchange rate is thus back close to 1.16, a level it has not reached since mid-June. The spread between BTPs and Bunds on the MTS secondary market is down slightly. At the start of trading, the yield spread between the benchmark 10-year BTP and the German bond of the same maturity stood at 77 basis points, down from 78 basis points at last Friday’s close.

The Tokyo Stock Exchange closed higher, buoyed by technology shares. The Nikkei index rose by 0.74% to 69,220.25 points. Buying was fuelled by strong demand linked to artificial intelligence, which continued to bolster the prospects of companies integrated into the global semiconductor supply chain. Meanwhile, on the data front, the economy showed a slowdown in the second quarter of the year compared with the first, with GDP growing by 0.3% quarter-on-quarter (down from 0.5% in the first three months of the year), whilst still recording a year-on-year increase of 1.1%. Industrial production performed well, growing more than initially estimated.